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MARKETS
Global Macro Part 2: Commodities – Short
Side of Long
Maybe… just maybe… US
equities are not going to be the best performer this year! * Annualised
performance of major assets around the world… * Commodity index broke out of
its long downtrend in early 2014! * Some commodities continue to struggle
despite a recent rally * Industrial metals are breaking out after a three year
bear market!
Popular Stocks Stink – Millennial
Invest
Home is where the money is – FT
Savers have embraced a
little bit more investment tourism this side of the world’s financial crises,
but home bias still rules when it comes to stock markets.
The Ubiquity of “Lost Decades” – Above
the markets
10-year periods that suffered
negative equity returns, a “lost decade” actually happens fairly frequently
Asness on the central paradox of efficient
markets – Forbes
Efficient market?
Baloney, says famed value- and momentum strategist Cliff Asness, Chief
Investment Officer at AQR Capital Management, who sat down with me to discuss
his unique quant strategy. A video and transcript of our conversation follows.
"Smart beta" and factor investing
questions – Humble
Student
This is another of an
occasional series on how good quantitative investors use both the left and
right brains to create robust investment processes.
Persistent noise trading and market meltdowns – voxeu.org
Since capital flows to
and from hedge funds are strongly related to past performance, an exogenous
liquidity shock can trigger a vicious cycle of outflows and declining
performance. Therefore, ‘noise’ trades – usually thought of as erratic – may in
fact be persistent. Based on recent research, this column argues that there can
be multiple equilibria with different levels of liquidity and informational
efficiency, and that the high-information equilibrium is unstable. The model
provides a lens through which to interpret the ‘Quant Meltdown’ of August 2007
and the recent financial crisis.
Berkshire Hathaway: Playing out the last hand – The
Economist
Warren Buffett’s 50
years running Berkshire Hathaway have been one of business’s most impressive
winning streaks. How will it end?
ECONOMICS
Book Review: Big Ideas in Macroeconomics: A
Nontechnical View – Europp
/ LSE
In this book, Kartik
B. Athreya aims to offer a nontechnical description of prominent ideas and
models in macroeconomics, arguing for their value as interpretive tools as well
as their policy relevance.
Long- and Short-Term Unemployment Have Similar
Inflation Impact: Fed Paper – WSJ
Time to stop following defunct economic
policies – Reuters
Only in economic
forecasts -- not in the real world -- is it true that any policies the central
bank chooses to follow lead automatically to full employment.
100%
RESERVE BANKING?
Martin Wolf on funny money creation – FT
Anyone who has
speculated about the significance and effects of quantitative easing in the
last five years should probably have a read.
Toward a run-free financial system – John
Cochrane
I suggest that
Pigouvian taxes provide a better structure to control debt issue than capital
ratios; that banks should be 100% funded by equity.
100% Reserve Banking — The History – House
of Debt
So both John Cochrane
and Martin Wolf are advocating 100% reserve banking. If these two agree on
anything, it’s worth taking seriously!
Is A Banking Ban The Answer? – Krugman
/ NYT
Wolf misses shadow
banking, while Cochrane is highly interventionist…Broader issues of excess
leverage, and the resulting balance-sheet problems of many households, are key.
And neither 100% reserves nor a repo tax would have addressed that kind of
leverage.
PIKETTY’S
BOOK ‘Capital in the Twenty-First Century’
First Thoughts on Piketty – Gregg
Mankiw
Stiglitz. Krugman and Durlauf in discussion
with Piketty – Youtube
Piketty Is Right – Robert
M. Solow / New Republic
Solow, Piketty and the problem with bank
bailouts – The
Telegraph
Piketty for Dummies – EconoSpeak
Today’s Wonky Elite Is in Love With the Wrong
French Intellectual – Daily
Beast
Poulos Gets Piketty—and Tocqueville—Wrong – Daily
Beast
MONETARY
POLICY
The Neo-Fisherite Rebellion – Noahpinion
The rebellious idea -
which I've decided to call "Neo-Fisherite" - is that low interest
rates cause deflation, and high interest rates cause inflation. If this is
correct, then not only is the Fed massively confused about what it's doing, but
much of the private sector may be reacting in the wrong way to monetary policy
shifts.
Noah Smith on the Neo-Fisherites – Money Illusion
Let’s blow the
neo-Fisherite model right out of the water.
If the Fed had a meeting, how would that affect
inflation? – Money Illusion
Targeting wage inflation – Mainly
Macro
My own argument for
targeting wage inflation has been a combination of theory and practicality
A. Gary Shilling: The Economic Monster Called
Deflation – View
/ BB